DAILY ALERT

Weapons Tunnels To Gaza Strip Dug From Egyptian Army Bases - Jonathan Lis (IMRA/Ha'aretz) The Palestinian Authority smuggled weapons from Egypt via tunnels dug from Egyptian army bases to the southern Gaza Strip, Chief of Staff Maj. Gen. Moshe Ya'alon revealed on Sunday at a cabinet meeting. In order to locate the openings of the tunnels on the Egyptian side, the IDF has a practice of exploding the openings of the smuggling tunnels in the Gaza Strip and checking where the smoke from the explosion in Egypt comes out. According to Ya'alon, in many cases it was found that the openings of the tunnels were located within private Egyptian homes near the border. Recently the IDF noticed that the smoke rose from Egyptian army bases and from bases of the Egyptian Border Guard.

Saudi Says Iran Drags Feet Returning Al Qaeda Leaders - John Mintz (Washington Post) As many as 15 al Qaeda leaders and operatives are currently in Iran, but Tehran is dragging its feet in responding to requests from Arab governments to repatriate the accused terrorists for interrogation and trial, a senior Saudi official said yesterday. Among the al Qaeda members being held in what Iranian officials describe as "safe houses" are Saad bin Laden, who was being groomed to succeed his father, Osama bin Laden, as al Qaeda's leader. Yesterday's briefing for reporters was part of a wide-ranging attempt by Riyadh to demonstrate that it is working closely with Washington on counterterrorist initiatives, including attempts to win concessions from Tehran. The Saudi official said a 10-person al Qaeda cell captured in Riyadh yesterday after a shootout with police is tied to a London-based Saudi dissident who opposes the royal family, Saad al Faqih.

2 Dead in Two Terrorist Blasts in IsraelLess than an hour apart, a pair of suicide bombings Tuesday killed two Israelis and wounded at least a dozen others. In response to the terror attacks, Israeli officials delayed Tuesday's planned release of 76 Palestinian prisoners. In the first attack, which occurred around 9:15 a.m., a suicide bomber detonated himself inside a small grocery store at a shopping mall in the central Israeli town of Rosh Ha'ayin, killing one person and wounding at least 10 others. The second bombing took place at a bus stop along a major highway near the West Bank Jewish settlement of Ariel, police said. One Israeli was killed at the site. Two others were critically wounded, authorities said. (CNN)

U.S. Urges Calm on Israel-Lebanon BorderThe United States urged Israel, Lebanon and Syria not to let violence escalate along the Lebanon-Israel border. He said U.S. diplomats have urged Syria and Lebanon to exercise control over the Hizballah guerrillas, who killed an Israeli teenager in rocket attack Sunday. (AP/Washington Post) See also Text of State Department StatementIt remains in the interest of both Syria and Lebanon to maintain that calm along the Israel-Lebanon border, and we continue to reiterate our calls for all sides to abide by their assurances to the United Nations and ensure that there are no further violations of the UN-demarcated withdrawal line....Syria and Lebanon need to exercise control. Hezbollah, as you know, is a terrorist group full of people opposed to the peace process, full of people eager to disrupt efforts that are beneficial to the peoples of the region, to disrupt the roadmap, to disrupt the calm that we saw for so many months already this year. And they have got to take efforts to not allow these people to disrupt that and to continue with that before there is any further escalation. (State Department)

Lawmakers Assess Merits of West Bank BarrierThree Houston-area lawmakers returned Sunday from meetings with Israeli and Palestinian leaders with the hope that a barrier under construction will not divert the peace process. Democractic U.S. Reps. Sheila Jackson Lee, Chris Bell and Gene Green were part of a delegation that met with Palestinian Authority Prime Minister Mahmoud Abbas and Israeli Prime Minister Ariel Sharon to discuss the peacekeeping process. "The fence is defense," said Jackson Lee. "It's not a divisive political fence. This is an actual fence that keeps intruders out." Green noted that on their tour of the region, the group saw a place where a wall had to be built to keep snipers from firing into Israeli apartments. "Security and peace are the goals for both the Palestinians and the Israelis," Green said. "Good fences make good neighbors." (Houston Chronicle)

News Resources - Israel, the Mideast, and Asia:

Israel Steps Up Diplomatic Offensive against Damascus - Herb KeinonIsrael escalated its diplomatic offensive against Syria Monday, while Hizballah, for the first time in three days, refrained from firing anti-aircraft guns toward Israel. One Israeli diplomatic source said Israel believes "the type of escalation over the last few days that included firing directly into an Israeli town, and not just in the area around Har Dov, could not have taken place without prior coordination with Syria." The official would not say whether Israel believes Syria initiated the escalation. However, he said, Syria "has to make sure this doesn't happen, and they are not doing that." (Jerusalem Post)

U.S. Formally Announces Permission for Phalcon Sale to IndiaThe United States officially announced Monday that it is removing all opposition to Israel's sale of the Phalcon airborne radar system to India. A year-and-a-half ago, Israel and India agreed to the deal, and the Americans gave their approval in principle. But in early 2002, the U.S. asked Israel to postpone the sale because of rising tensions between India and Pakistan. The Phalcon is a long-range Israeli-made radar mounted on a Russian-built cargo plane. The radar will extend the range of the Indian air force, enabling very long-range identification of targets and control over the weapons aimed at them. (Ha'aretz)

Congressmen Urge Bush to Pressure Syria for Tannenbaum's ReleaseCongressmen from the House of Representatives Committee on International Relations are calling on US President George W. Bush to put pressure on Syria to help secure the release of Israeli businessman Elhanan Tannenbaum who is being held captive by Hizbullah. Tannenbaum, a retired colonel, was abducted while on a trip abroad in October 2000, a short time after the kidnapping of three IDF soldiers. Details of the congressmen's letter were unveiled as the Tannenbaum family marks his 57th birthday on Tuesday. (Jerusalem Post)

Jews from Arab States Are also RefugeesThe World Jewish Congress has asked the UN to recognize Jews forced out of Arab countries as refugees of similar status to Palestinian refugees. WJC director general Avi Becker said the UN should follow the Council of Europe, which two months ago called for a solution to the Palestinian problem via the countries where they settled. (Ha'aretz)

Saudis Undermine the Hudna -- Two Views

Saudi Money ‘Doesn’t Go to Militants’Palestinian Prime Minister Mahmoud Abbas has denied that Saudi money intended for needy Palestinians reaches militant groups. “Saudi financial assistance to needy Palestinians goes through the Palestinian Authority and not to militant groups,” he told reporters on Saturday. “We have been receiving financial assistance from Saudi Arabia since the formation of the Palestine Liberation Organization. It is used to build houses, support poor students and buy relief supplies,” the Palestinian prime minister said. (Arab News)

Israeli Intelligence Officials Dismiss Abbas's Denial of Saudi Aid to Terrorists - Arieh O'SullivanIntelligence officials on Sunday dismissed claims by Palestinian Authority Prime Minister Mahmoud Abbas that no Saudi funding reached terrorist groups. Senior intelligence officials noted that Saudi Arabia is siding with what they call the "axis of evil" made up of Iran, Syria, and Hizballah which is striving to make the peace process fail. "Some 60 percent of the annual Hamas budget, between $12 million to $14 million, comes from Saudi Arabia," one intelligence source said. Officials said the money flowed to charities, and also found its way to the Hamas military wing and the families of suicide bombers. They noted, however, that this money was mostly from non-governmental organizations. It was not smuggled in, for the most part, rather openly relayed through banks. Nevertheless, said the official, it was difficult to halt. (Jerusalem Post)

Blood, Money, and Oil - Mortimer B. ZuckermanAny rational government that imports 55 percent of its oil every day would be crazy to stand aloof from the importance of Iraq's huge oil reserves. Right now the critical player in the Middle East is Saudi Arabia. It is a shaky, despotic regime that uses its vast revenues to sustain a corrupt living standard for about 7,000 princes in their pursuit of yachts, women, and liquor, and in support of a brand of religious extremism that has inspired many of their young to hate us--and seek our destruction. Saudi Arabia is the kingpin of the OPEC, a cartel for the rich that has held oil prices above a fair-market value for several decades. OPEC is currently controlling production to keep the world price at $32 a barrel and continuing to flaunt its monopoly power. The new factor is Iraq. The challenge is how to manage Iraq's role. How much oil Iraq produces will not only determine the living standards of its people but also affect everything from the Russian economy, uniquely dependent on energy prices, to the stability of Saudi Arabia, and indeed of Iran. In 10 years, Iraq could be the world's leading producer. The benefits of an Iraq independent of OPEC are immense all round. We would reduce our unwise dependence on Saudi Arabia. An Iraq outside the cartel could do what is best for its people and not for the cartel, whose aim is to sell less oil at higher prices. (U.S. News)

The following myths, or outdated facts, support the world's misjudgment of the power of the Persian Gulf oil producers--especially Saudi Arabia, but also Iran, Iraq, and the Gulf states.

Most of the world's oil reserves are in the Middle East. Wrong. That is only true for "conventional" oil, the stuff that flows easily. When you count "unconventional" oil, Canada has larger reserves than Saudi Arabia. Technological developments over the last 10 years have reduced the cost of producing unconventional oil to below $15 a barrel, so that it is being produced profitably at the price at which oil has sold for almost all of the last 30 years.

The world can't get the increased oil supply it will need in coming years without buying a larger share from the Persian Gulf. Wrong. There are many potential sources of increased oil supply--in addition to unconventional oil. In 2020 the Gulf may supply even less than the 23 percent of the world total it provided last year.

The United States and other consumers need Gulf oil much more than the Gulf countries need the money paid for the oil. Wrong. Most of the Gulf countries have become very dependent on their oil income, which provides almost all their foreign currency. The oil-consuming countries get less than a quarter of their oil from the Gulf and have stockpiles of oil that could replace Gulf supply for six months or more.

Saudi policy toward the United States is based on their perception of our fear of their oil power. When the American political community realizes that the world economy is not in Saudi hands as much as the Saudi economy is in the hands of Western oil buyers, Washington can stop being afraid of the Saudis.

A computer software glitch led to the mistaken distribution of an e-mail to the Daily Alert yesterday. New safeguards have been added to prevent this sort of error in the future. Daily Alert has received hundreds of e-mails, the vast majority of which have expressed appreciation for its succint summaries of daily events in Israel and the Middle East.